Highlights of Historic Treaty to Reunite Germany

Times Staff Writer

Following are highlights of the 115-page "Treaty for the Creation of a Currency, Economic and Social Union" between East and West Germany:

Foundations of unity: As of July 2, both Germanys will be market economies with freedom of movement for workers, capital, goods and services; both will be committed to a free, democratic and federal system; East German law conflicting with the treaty in any way will be invalid.

Currency union: The powerful West German deutschemark becomes the legal tender of both countries, with West Germany's central Bundesbank regulating all monetary policy. East Germans will exchange their weaker ostmark at a rate of 1 to 1 for wages, pensions and savings up to 4,000 marks (about $2,500) for most adults and 6,000 marks (about $3,800) for people over age 60. Everything else will swapped at a rate of two ostmarks to one deutschemark.

Economic union: Private ownership and a capitalist free-market system in accordance with European Community law and objectives replace the moribund economy of East Germany's former Stalinist system; East Germany adopts West German monetary, economic and tax policies.

Social union: Establishes a social security network in East Germany, with labor law, unemployment benefits, health insurance and pensions patterned after the West German system.

State budget and finances: East Germany must balance its budget, which posted an estimated deficit of 33 billion deutschemarks (about $20 billion) in the second half of this year. West Germany will provide unspecified aid to help achieve this. East Germany must scrap subsidies and gradually adopt European Community customs rules.

German Unity Fund: West Germany will provide $115 billion marks ($70 billion) to help with reconstruction during East Germany's transition to a free-market system.